Dalip Singh Arshi vs Aerens Jai Reality Pvt. Ltd

M. Shreesha, J

Aggrieved by the order dated 16.02.2018 in Consumer Complaint No. 903 of 2015 passed by the Delhi State Consumer Disputes Redressal Commission, New Delhi (in short "the State Commission"), the Opposite Parties (hereinafter referred to as "the Developer") and the Complainant preferred First Appeals No. 923 of 2018 and First Appeal No. 1091 of 2018 respectively under Section 19 of the Consumer Protection Act, 1986 (in short "the Act"). By the impugned order, the State Commission has directed the Developer to refund ₹12,75,000/- with interest @ 10% p.a. from the date of payment till the date of refund within one month.

The facts in brief are that the Complainant booked a property bearing No. F-15, Rose Villas/ Lotus Floors in Aerens Jai City, Jagashari, which was a corner one facing the park as shown in the project map and brochure and paid ₹12,75,000/- i.e. 25% of the total sale consideration of ₹51,00,000/-. It is averred that the Complainant duly complied with the terms and conditions of the Agreement and the preferential location charges (PLC) was never part of the Agreement which is clearly transpired from the earlier letter dated 15.03.2011, which is addressed to the Complainant, stating PLC if any as 'nil'. But subsequently, with a malafied intention another letter dated 03.05.2011 was sent, with PLC as 5%, acknowledging the payment also with another letter dated 21.07.2011. The Developer sent one more letter on 15.06.2011 with PLC @ 10% over and above the agreed cost and subsequently issued final demand notice. It is pleaded that when the Complainant confronted the Developer with the Original Agreement, there was no response and thereafter the Developer sent him a frivolous notice. It was assured that the possession of the Tower would be given in two years but the Developer failed to handover the allotment letter and the possession within stipulated period. The project was to be completed by January 2013, but till date the construction is incomplete.

It is pleaded that the Developer in violation of the payment plan has sent an illegal notice claiming a sum of ₹2,78,631/- towards PLC charges, when no such charges were part of the terms agreed to at the time of the booking. It is only to cover up the delay in completing the construction that the question of payment of PLC charges was raised. The Developer has issued a notice of cancellation vide letter dated 20.07.2013 after accepting an amount of ₹12,75,000/- specifically stating that an amount of ₹2,78,631/- is to be paid within 7 days on receipt of notice, failing which the allotment would be cancelled. The Complainant replied to the said notice vide letter dated 27.07.2017 stating that the Complainant is not liable to pay the PLC charges as it was never informed to him at the time of booking. Vexed with the attitude of the Developer the Complainant filed a Consumer Complaint seeking the following reliefs before the State Commission:

"(a) Direct the respondents to handover the allotment letter as well as possession of the Tower forthwith with all legal formalities including after accepting the balance consideration

(b) Respondent be directed to withdraw the impugned cancellation notice.

(c) Award compensation in terms of money quantified at ₹10,00,000/- towards damages losses hardship mental trauma, opportunity loss, anxiety, etc. suffered by the Complainant on account of the acts and omission and deficiency in service, negligence jointly and severally of the Respondents/ Opposite Parties as detailed in the Complaint;

(d) Award cost of litigation in favour of the Complainant;

(e) Pass such other and further order/s as this Hon'ble Forum may deem fit and proper in the facts and circumstances of the case."

The State Commission had closed the right of the Developer to file their Written Version as notice was served on 22.03.2016 and though the Developer was represented by a counsel Shri Rishab Mehta, and the copy of the complaint was supplied to him, he had failed to file the Written Version within 30 days.

The State Commission while allowing the Complaint directed the Developer to refund ₹12,75,000/- with interest @10% p.a. and observed as follows:

"4. We have gone through the material on record and heard arguments. Counsel for the complainant drew our attention to schedule of due payment for original booking which is at page 22 in which at Sr. No. 7 zero amount has been shown as PLC if any. He also drew our attention to schedule of due payment in original booking copy of which is at page 29. The same shows PLC @ 5% amounting to Rs. 95,864.65. The third schedule of due payment for provisional booking copy of which is at page 38 shows PLC @ 10% amounting to Rs. 5,10,000/-.

In view of initial schedule for payment showing no PLC , demand of OP for PLC is illegal and unjustified.

The next submission of counsel for the complainant is that OP obtained signatures of the applicant on blank application form. This was refuted by counsel for the OP who filed a photocopy of signed application. In view of the same contention of the complainant that he signed blank application is rejected.

Counsel for the OP relied upon clause 10 of the application form to show that 20% of the basic sale price was to constitute earnest money and was liable to be forfeited in case of non-fulfillment of terms and conditions of allotment. The same cannot be accepted as there is delay in completion of the project by the OP, in view of the decision of National Commission in Kavita Ahuja vs. Shipra Estates I (2016) CPJ 31.

Counsel for the complainant submitted that complainant has prayed for possession in the complaint and complainant was interested in getting possession. However we feel that in view of reply dated 27.07.13 sent by the complainant asking for refund of the money he is not entitled to possession of the villa."

Learned Counsel appearing for the Developer in First Appeal No. 923 of 2018 submitted that the State Commission did not go into the aspect of limitation as cancelation letter is dated 27.07.2013 and the Complaint was filed on 30.09.2015 which is beyond the stipulated period of two years; that the State Commission has allowed the refund, when the prayer was for delivery of possession; that the Developer has rightly cancelled the allotment since only 25% of the total sale consideration was paid and the additional PLC charges were never paid; that as per the Agreement it was agreed that PLC @ 10% was to be payable i.e. 5% for corner property and 5% for green facing; that 10% PLC which is chargeable is clearly mentioned in the application for allotment which was signed by the complainant, accordingly PLC @ 5% on the basic sale price was claimed from the Complainant at the time of payment of second installment and further 5% at the time of payment of third installment; in the letter dated 03.05.2011 it was made clear that if the payments are not made in the given time the Developer shall be constrained to charge interest and other charges, still no amount was paid; finally on 20.07.2013 a demand was made and the period of 7 days was given to the Complainant to comply with the payment of the demanded amount, failing which the allotment stood automatically cancelled. Learned counsel also argued that as per Clause 11 and 12 of the allotment Agreement the Developer was well within their right to terminate the Agreement and cancel the allotment and forfeit the 20% of the basic sale price and hence there is no deficiency of service on their behalf. He relied on the judgement of the Hon'ble Apex court in Satish Batra Vs. Sudhir Rawal- civil Appeal NO. 7588 of 2012, in which the Hon'ble Supreme Court has stated that earnest money is a part of the purchase price, when the transaction is carried out and it is forfeited when the transaction falls through by reasons of default or failure of the purchaser.

Learned counsel appearing for the Complainant in his grounds of Appeal in First Appeal No. 1091 of 2018 submitted that the State Commission has erred in awarding only a meagre interest of 10% p.a., though the Developer has illegally charged PLC, which was never part of the Agreement and has unfairly cancelled the allotment in the year 2013. He further argued that this Commission in Swarn Talwar & ors. Vs. Unitech Lmited in CC/347/2014 dated 14.08.2015 held that the buyer's money should be refunded with interest @ 18% p.a. and prayed that their Appeal be allowed an interest @ 18% p.a. be awarded together with compensation of ₹21,00,000/- towards damages, hardship, mental trauma and opportunity loss.

The facts not in dispute are the booking of the subject property; the payment of ₹12,75,000/- on 15.03.2011; the demand letter dated 02.07.2013 for ₹2,78,937/- towards PLC charges to be paid within 7 days failing which the allotment would stand automatically cancelled; the Complainant's reply dated 27.07.2013 and the fact that the Developer assured possession in two years but the project was delayed. The contention of the learned counsel for the Developer that no amount be refunded to the Complainant and that the entire amount is to be forfeited because the demand for PLC charges, was not paid is not sustainable. A perusal of the schedule of payment shows that initially no amount was shown towards PLC but thereafter the second schedule shows the PLC @ 5% amounting to ₹95,864.65 and the third schedule shows PLC @ 10% amounting to ₹5,10,000/-. The State Commission has observed that as the initial schedule for payment does not show any PLC the demand by the Developer is illegal and unjustified. Learned counsel for the Developer contended that the demand for PLC was to be made at the time of payment of second and third installments and the letter dated 03.05.2011 did not mention PLC because it was sent as a reminder for the first installment. Clauses 11 and 12 which pertains to earnest money and forfeiture and the interest rate to be charged by the Developer on delayed payments is reproduced as hereunder for better understanding of the case:

"11. The company and the applicant hereby agree that the amounts paid with the application for registration and booking in installments as the case may be, to the extent of 20% of the basic sale price of the said Independent floor will collectively constitute the earnest money. This earnest money shall stand forfeited in case of non-fulfillment of these terms and conditions and of Allotment Letter/ Agreement as also in the event of failure by the applicant to sign the Allotment Letter/ Agreement within the time stipulated by the Company.

The time for timely payment of the installments is the essence of this contract. It shall be incumbent on the applicant to comply with the terms of the payment and all other terms and conditions of the allotment/ sale, failing which the applicant shall have to pay interest @18% p.a. on the delayed payments for the first 3 months from the due date. If the due amount with interest is not paid by the applicant within this grace period of 3 months, company reserves its right to forfeit the earnest money and cancel the booking."

A brief perusal of the Application form shows that the basic sale consideration was ₹51,00,000/- plus PLC. However it is the contention of the Complainant that they were made to sign on the blank Application Form. This cannot be sustained since the entire Application form contains not only the total sale consideration plus PLC charges but also the details of the said property. Be that as it may, having regard to the fact that the construction is still not complete and the promised date of delivery of possession was way back in the year 2013, the act of the Developer in forfeiting 20% of the amount paid amounts to unfair trade practice.

It is pertinent to note that the Developer, though rendered their appearance before the State Commission, did not choose to file their Written Version. It is significant to mention that even in their grounds of Appeal before this Commission the date of completion of the project was never mentioned. In fact when there are specific latches on behalf of the Developer in not having completed the project within the stipulated time as per the terms of allotment, forfeiting 20% of the amount amounts is not only deficiency of service, but at the cost of repetition, also amounts to unfair trade practice.

As the Developer has committed default in performing their contractual obligation by not completing the construction within a reasonable period they have no legal right to forfeit any amount of the money deposited by the Complainant with them. As per the terms of the allotment made to the Complainant, he was required to pay interest @ 18% p.a. in case of default on his part in paying any installments or any amount due from him. On the reasoning of parity, they also pay interest to the purchaser at the same rate at which it would have charged interest from him in the event of default on his part. As observed by this Commission in Puneet Malhotra Vs. Parsvnath Developer Ltd. in CC/232/2014 dated 29.01.2015, we cannot be oblivious to the fact that had the Developer not agreed to construct the flat in question within a reasonable period of time as promised, the Complainant who was in need of residential accommodation might have acquired alternative accommodation instead of putting all his funds in the hands of the Developer. It can hardly be disputed that there was steep appreciation in the market value of the residential land since the time the booking was made. For all the aforenoted reasons, we are of the considered view that the State Commission did not commit any error or illegality in not accepting the forfeiture of the amount paid by the Complainant. Hence First Appeal No. 923 of 2018 preferred by the Developer is dismissed.

Now we address ourselves to the Appeal preferred by the Complainant seeking enhancement in the interest rate awarded. Having regard to the fact that the Developer charges interest @ 18% p.a. on delayed payment and have specifically stated that 'time is the essence of the contract' but have not adhered to the time clause themselves and have miserably failed to complete the construction, even after 7 years of the date of allotment letter i.e. 05.01.2011, we are of the considered view that the Complainant is entitled to a reasonable interest @ 12% p.a. from the date of deposit till the date of realization together with costs of ₹25,000/-. We are not inclined to award any additional compensation as interest has already been awarded as damages.

In the result, the Appeal preferred by the Complainant is allowed in part modifying the order of the State Commission and increasing the rate of interest from 10% to 12% p.a. and also awarding costs of ₹25,000/-. Time for compliance is four weeks from the date of receipt of a copy of this order, failing which the amount shall attract interest @ 14% p.a. for the same period.

The statutory amount deposited by the Appellant in First Appeal No. 923 of 2018 at the time of filing of the Appeal shall stand transferred to the Consumer Legal Aid Account.